{"id":2685,"date":"2025-05-14T21:06:31","date_gmt":"2025-05-14T21:06:31","guid":{"rendered":"https:\/\/www.sprucemoney.com\/resource-center\/?p=2685"},"modified":"2025-05-14T21:06:32","modified_gmt":"2025-05-14T21:06:32","slug":"types-of-credit-cards","status":"publish","type":"post","link":"https:\/\/www.sprucemoney.com\/resource-center\/building-credit\/types-of-credit-cards\/","title":{"rendered":"Types of credit cards: Differences and considerations for choosing one"},"content":{"rendered":"\n

Credit cards are a convenient way to make a purchase now and pay later. Plus, they can help you build credit and provide perks, such as cash back or airline miles. We all love free stuff. (Access to airport lounges or free upgrades to first class? Yes please!) But there can also be downsides. Rewards cards may have high fees or interest rates, for example. And if you don\u2019t pay your cards off each month, you could find yourself deep in credit card debt.<\/p>\n\n\n\n

Whether you\u2019re applying for your first card or you\u2019re a seasoned swiper, take some time to research your options before signing up to help make a smart choice for your financial situation, goals, and lifestyle. Read on for tips on how to choose a credit card.<\/p>\n\n\n\n

<\/a>Different types of credit cards<\/h2>\n\n\n
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As you\u2019re shopping around for a new card, there are eight common types of credit cards to get to know. We\u2019ve listed them by their type but note that some features may overlap.<\/p>\n\n\n\n

Unsecured cards<\/h3>\n\n\n\n

Most credit cards are unsecured. To open one, you don\u2019t need to put down a deposit or provide any other collateral. Instead, credit card companies will rely on your credit history and score to help them decide whether to approve a new customer. Individuals with higher scores have an easier time getting approved for an unsecured credit card and may qualify for lower interest rates.<\/p>\n\n\n\n

Secured credit cards<\/h3>\n\n\n\n

Secured credit cards can be a good option if you have no credit or have poor credit and you\u2019re having trouble qualifying for a new unsecured card. Secured cards require a refundable security deposit, which reduces risk for the card issuer, making them more likely to extend credit. By making on-time payments with your secured card, you can gradually build or rebuild your credit score. In doing so, you\u2019ll be expanding your future financial opportunities.<\/p>\n\n\n\n

Learn more about the differences between secured vs. unsecured credit cards<\/a>. We should note it\u2019s also possible to build credit without a credit card<\/a>.  <\/p>\n\n\n\n

Rewards credit cards<\/h3>\n\n\n\n

You can make the most of everyday spending with rewards credit cards that let you earn points, miles, or cash back on your purchases. Several types of credit cards fall under the rewards card umbrella, including cash back cards, travel credit cards, and retail cards.<\/p>\n\n\n\n

Cash back credit cards<\/h3>\n\n\n\n

What is cash back on a credit card? A cash back credit card offers you the chance to earn back a percentage of your purchases as cash rewards. Depending on the issuer program, you can save the money you earn to use toward your other financial goals or apply it to your credit card balance.<\/p>\n\n\n\n

Travel credit cards<\/h3>\n\n\n\n

Got a case of wanderlust and wondering what a travel credit card can do for you? These cards can be a great fit for frequent travelers and typically offer travel rewards and perks like airline miles, hotel discounts, or travel insurance. Users rack up rewards on travel and everyday purchases. While you\u2019re on the road, some travel credit cards offer additional benefits, such as no foreign transaction fees.<\/p>\n\n\n\n

Retail or gas credit cards<\/h3>\n\n\n\n

Do you frequently shop at a particular store? If so, a retail card might be appealing. They can offer discounts, rewards, or financing options for purchases at a store or gas station. <\/p>\n\n\n\n

Student credit cards<\/h3>\n\n\n\n

Student credit cards are designed for students attending college who have limited credit histories. They typically have lower credit limits than traditional cards and offer an opportunity to build credit. After graduation, students can often transfer their student credit card to a standard credit card.<\/p>\n\n\n\n

Business credit cards<\/h3>\n\n\n\n

If you\u2019re a small business owner or working as a freelancer, a business card can help you manage your finances while you get your hustle on. Benefits include expense tracking, separate business accounts, and rewards tailored to business-related purchases.<\/p>\n\n\n\n

<\/a>How to choose a credit card<\/h2>\n\n\n\n

With so many types of credit cards available, how can you pick the one that\u2019s best for you? Your decision will be based on your circumstances since everyone\u2019s financial situation is unique.<\/p>\n\n\n\n

Here are a few factors to keep in mind:<\/p>\n\n\n\n